Explanation

The franchisor, Slim Chicken's Development Company, LLC (SCDC), appears to be financially stable. The audited financial statements in Exhibit H show consistent, strong revenue and net income growth over the past three years. Assets exceed liabilities, resulting in positive member's equity, and the auditor's report does not contain a 'going concern' warning. This financial health suggests SCDC has the resources to support the system and meet its obligations.

Potential Mitigations

• An experienced franchise accountant should still review the complete financial statements, including footnotes, to provide an independent assessment of the company's financial health.
• Discuss the franchisor's debt structure and reliance on parent company funding with your financial advisor to understand the complete financial picture.
• Your attorney can help you understand any financial guarantees or support obligations between the franchisor and its parent company, SC Global.

Explanation

This risk was not identified. The data in Item 20, Table 3, shows very low franchisee turnover. For the most recent year (2024), out of a base of over 170 units, there were zero terminations, zero non-renewals, zero franchisor reacquisitions, and only four units that ceased operations for other reasons. This low turnover rate is a positive indicator of system health and franchisee satisfaction.

Potential Mitigations

• It is still valuable to have your accountant review the Item 20 tables to confirm the low turnover rates and understand the system's growth trajectory.
• Speaking with current and former franchisees from the provided lists can offer direct insight into their satisfaction and reasons for staying or leaving.
• Your attorney can help you formulate questions for franchisees regarding their relationship with the franchisor and the support they receive.

Explanation

This risk was not identified. The franchisor began offering franchises in 2011 and, as of the FDD date, has a substantial number of operating franchised units. The management team described in Item 2 possesses extensive experience in the restaurant and franchise industries. The system appears to be well-established and is not an unproven or startup concept, which reduces the risks typically associated with new franchise systems.

Potential Mitigations

• A business advisor can still help you research the brand's competitive position and long-term viability in the fast-casual restaurant market.
• It is always recommended to speak with a range of franchisees, both new and long-standing, to gauge their perspective on the system's maturity and direction.
• Have your attorney review the history of the franchisor and its predecessors in Item 1 for a complete understanding of the brand's evolution.

Explanation

This risk does not appear to be present. The business concept, focusing on chicken tenders, wings, and related items, operates within the established fast-casual restaurant sector. While market tastes can change, this concept is not built around a novel or fleeting trend. It represents a specific segment of a mature industry with a history of sustained consumer demand, suggesting it is not a fad.

Potential Mitigations

• It's still wise to conduct your own market research with a business advisor to assess the long-term demand for this specific type of restaurant in your local area.
• Discuss the franchisor's approach to menu innovation and brand development with current franchisees to gauge their adaptability.
• Your financial advisor can help you analyze the business model's resilience to economic shifts and changing consumer tastes.

Explanation

This risk was not identified. Item 2 details the business experience of the franchisor's key officers and directors. The management team collectively has many decades of experience in the restaurant industry with well-known brands, as well as specific experience in franchising. This depth of relevant experience is a positive factor, suggesting the leadership understands the complexities of both the industry and the franchise business model.

Potential Mitigations

• Even with an experienced team, a business advisor can help you assess if their specific skills align with the current strategic direction of the brand.
• When speaking with franchisees, you can inquire about their direct experiences with the management team and the quality of leadership.
• Your attorney can help verify the information presented in Item 2 and discuss its implications for the support you can expect.

Explanation

This risk was not identified. The FDD clearly discloses the parent company, Slim Chickens Global, LLC, and other affiliates in Item 1. Furthermore, the franchisor itself, Slim Chicken's Development Company, LLC, is not a thinly capitalized entity and presents its own audited financial statements in Item 21. There is no indication that required financial information for a controlling parent has been omitted.

Potential Mitigations

• Your accountant should review the affiliate relationships described in Item 1 and the related party transactions noted in the financials for a complete picture.
• It is important for your attorney to analyze any guarantees that may or may not exist between the parent and the franchisor.
• Always confirm with your business advisor that the provided financials give a full and fair view of the entity with which you are contracting.

Explanation

This risk appears to be minimal. Item 1 discloses a predecessor, Slim Chicken's, Inc., which briefly offered but never sold franchises in 2007. Items 3 and 4 do not disclose any material litigation or bankruptcy associated with this predecessor. The lack of negative history tied to the predecessor suggests there are no significant inherited issues or undisclosed historical problems that would pose a risk to you.

Potential Mitigations

• Your attorney should review the predecessor disclosures to confirm the limited nature of its past activities and lack of associated problems.
• A business advisor can help you research the brand's history to ensure there are no other undisclosed entities that might qualify as predecessors.
• Asking long-tenured employees or franchisees, if any exist from that era, could provide additional historical context.